Correlation Between AIC Mines and Carawine Resources

Can any of the company-specific risk be diversified away by investing in both AIC Mines and Carawine Resources at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining AIC Mines and Carawine Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AIC Mines Limited and Carawine Resources Limited, you can compare the effects of market volatilities on AIC Mines and Carawine Resources and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in AIC Mines with a short position of Carawine Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of AIC Mines and Carawine Resources.

Diversification Opportunities for AIC Mines and Carawine Resources

-0.52

Correlation Coefficient

AIC Mines  Carawine Resources

Excellent diversification

The 3 months correlation between AIC and Carawine is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding AIC Mines Limited and Carawine Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carawine Resources and AIC Mines is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on AIC Mines Limited are associated (or correlated) with Carawine Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carawine Resources has no effect on the direction of AIC Mines i.e., AIC Mines and Carawine Resources go up and down completely randomly.

Pair Corralation between AIC Mines and Carawine Resources

Assuming the 90 days trading horizon AIC Mines is expected to generate 1.15 times less return on investment than Carawine Resources. In addition to that, AIC Mines is 1.12 times more volatile than Carawine Resources Limited. It trades about 0.03 of its total potential returns per unit of risk. Carawine Resources Limited is currently generating about 0.04 per unit of volatility. If you would invest  9.40  in Carawine Resources Limited on September 23, 2024 and sell it today you would earn a total of  0.50  from holding Carawine Resources Limited or generate 5.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

AIC Mines Limited  vs.  Carawine Resources Limited

AIC Mines Limited

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AIC Mines Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, AIC Mines may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Carawine Resources

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Carawine Resources Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Carawine Resources may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with AIC Mines and Carawine Resources

The main advantage of trading using opposite AIC Mines and Carawine Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AIC Mines position performs unexpectedly, Carawine Resources can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Carawine Resources will offset losses from the drop in Carawine Resources' long position.

The idea behind AIC Mines Limited and Carawine Resources Limited pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.